Older Workers Retiring Earlier Than Planned

Although many baby boomers are planning to delay retirement to help restore depleted savings, a new study indicates that the majority are actually being forced to leave the workforce earlier than they planned.

US News & World Report notes that according to a recent survey by the Employee Benefit Research Institute and Mathew Greenwald & Associates, 47 percent of retirees left their jobs earlier than they planned. Of those, 42 percent cited a health problem or disability as the reason for early retirement, 18 percent quit their jobs to care for an ailing family member, and 34 percent lost their jobs due to downsizing or the closing of a business. Work-related reasons were a factor for 22 percent of the respondents, while 13 percent said outdated skills played a role.

While many retirees mentioned positive and negative reasons for early retirement, only 10 percent cited only positive reasons.

Moreover, while the median retirement age for retirees increased from age 59 in 1991 to age 62 in 2003, expectations for retirement proved to be very different than the reality. Just over 20 percent of workers surveyed planned to retire at age 70 or older, but only 5 percent did so. Meanwhile, only 3 percent anticipated retiring before age 55, yet the survey indicated that 18 percent left the workforce at that time.

Christine Fahlund, a senior financial planner at T. Rowe Price, noted that while retirement is sometimes unavoidable, more older workers need to consider the full picture before stopping work. "Maybe we all need to go through a transitional phase to retirement," she told The Wall Street Journal [from an article originally located at http://online.wsj.com/article/BT-CO-20090720-710756.html]. "It'll open our minds to all the things we want to do."

She advised baby boomers to continue working as long as possible but "enjoy some of the things you had planned in retirement," such as taking up hobbies or traveling. She also noted that older workers should look into part-time work and keep skills up to date. In the case of a sick relative, a leave of absence may very well be a better long-term choice.

Steve Sass, associate director of research at Boston College's Center for Retirement Research, noted that boomers often feel tempted to retire early. "All the rewards are immediate," he explained, "and all the gains of working longer are 10, 20 years down the road.

"Working longer is an easy solution to the fact that Americans don't save enough for a comfortable retirement. For most people it's a lot easier than saving a lot more."